JP Morgan Chase has long had the reputation of being one of the better-managed big banks in the country. So how did it make a $2 billion blunder, and what does it tell us about banking today, nearly five years after the onset of the financial crisis? When such questions are looming, we often turn to David Wessel, economics editor of the Wall Street Journal.

And David, welcome back to the program.

DAVID WESSEL: Good morning.

GREENE: Well, let's start with what I suppose is - seemingly, a basic question. What, exactly, was JP Morgan trying to do with this financial maneuver that went wrong?

WESSEL: Well, that's something that the bank's chief executive, Jamie Dimon, has been trying to explain. He did it on "Meet the Press" on Sunday, and he surely will try again today, when they have the company's annual shareholder meeting in Tampa, Florida.

As he tells it, JP Morgan Chase is in the business of making loans and investing in securities, buying corporate bonds. To reduce their risks, it hedges. And hedges means you kind of take out insurance in case your borrowers don't pay back their loans. And in this case, they took out insurance. They thought they took out too much insurance, so they tried to offset that by selling some insurance. That's what they were trying to do.

Now, why would a bank do this? Well, Mr. Dimon and other bankers say that in order to manage the risk of their portfolio, in order to make their business less risky, they do this hedging. And that allows them to make more loans - more car loans, more credit card loans, more job-creating business loans, and stuff like that. Unfortunately, it didn't work out as they'd planned.

GREENE: I mean, this seems pretty astounding. You keep using terms like hedge and reduce risk. And they're basically arguing that an effort to reduce risk loses $2 billion. I mean, is everyone buying this explanation?

WESSEL: No. And especially from the outside, it's incredibly hard to tell the difference between a hedge, where you're offsetting some risks you take in your business, and simply going to the casino and making a bet in the hopes of making a profit.

And there are a lot of people outside JP Morgan who said look, that's what they were doing. In fact, some people who used to work at JP Morgan have been saying that's what they were doing. Yes, they were running a little insurance business to protect their banking business. But on the side, they were trying to make what they call icing, some profits on the side.

And the critics of current banking practices say look, if people want to hedge, if they want to go and speculate in the market, that's fine. But the people who do that shouldn't be in the business of running a bank that has government-guaranteed deposits. You shouldn't mess up these two businesses.

GREENE: Even bringing up the word casino as a comparison for a bank is probably something no one ever wants to hear.

WESSEL: Right, especially Jamie Dimon.

GREENE: Well, can you just give us a window into a sophisticated bank like this? I mean, you have this image of a place with very smart experts and all these, you know, safety precautions in place. How could this happen?

WESSEL: Well, that's what's so scary here. So as you said at the beginning, JP Morgan Chase was supposed to be one of the best-managed banks. They got through the financial crisis largely unharmed. And they managed to make a deal that was so complicated that its own senior management couldn't really understand it.

Now, Mr. Dimon says, we're still going to earn a lot of money this quarter. So it isn't like the bank is jeopardized. And that, as far as we know, is true. But it did take 10 percent off its stock price. And it is raising the question about whether this bank, and its peers, are simply too big to manage. After all, if Jamie Dimon can't figure out what his London investment office is doing, who can?

We worried a lot about banks, during the crisis, that we called too big to fail. That is, the government couldn't let them go under and had to bail them out. But the result has been that banks are even bigger than they were before the crisis. And this "too big to manage" theme is really, really front and center now.

GREENE: And David Wessel, really briefly - I mean, people who don't own, you know, stock in JP Morgan - I mean, you know, Americans out there, should they be worried about this, you know, becoming a larger problem?

WESSEL: Yes. One, it's a big mistake, and taxpayers pay if it gets to be a bigger mistake. So the question is, is this is a warning sign that banks are back to their own shenanigans? And secondly, what happens at one bank usually doesn't happen only at one bank. All bank stocks are down on this. And the question is whether banks are doing things that will go kablooey(ph) and put the economy at risk, the way it was four or five years ago.